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Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is

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Beryl's Iced Tea currently rents a bottling machine for $53,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: A. Purchase the machine it is currently renting for $155,000. This machine will require $24,000 per year in ongoing maintenance expenses. B. Purchase a new, more advanced machine for $265,000. This machine will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $37,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and he machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as s the rental o the machine. Assume also that the machines will be depreciated via he straight-line method over seven ears and hat hey have a ten-year life with a negligible savage value. The marginal corporate tax rate is 3 %, Should Be ts ce oa t to rent, purchase its current machine, or purchase the advanced machine? To make this decision, calculate the NPV of the FCF associated with each altemative. (Note: the NPV will be negative, and represents the PV of the costs of the machine in each case.) The NPV of renting the machine is SL. (Round to the nearest dollar. Enter a negative NPV as a negative value.) The NPV of option A is S(Round to the nearest dollar. Enter a negative NPV as a negative value.) The NPV of option B is S(Round to the nearest dollar. Enter a negative NPV as a negative value.) Which of the following is the best choice? (Select the best choice below.) O A. Purchase the advanced machine O B. Rent the advanced machine C. Rent the current machine. O D. Purchase the current machine

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